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Steven LI
Published in X-Patents.ai.
Nearly-Broke To $1.5 Billion: How They Built Loom And Grew It To 14 Million Users
Two years into college, Vinay Hiremath dropped out, drawn in by the allure of startups, which would take him from a small college town in Illinois to Palo Alto, CA. It was a big change—one that helped him learn the ropes of what it takes to run a small company up against incumbents. A little over three years later, he co-founded his own. Today, we know it as Loom, the asynchronous video messaging company that now serves over 14 million users and 200,000 businesses.
But in Loom’s earliest days, nobody could have guessed its trajectory. Vinay had maxed out his credit cards and Loom was just two weeks away from running out of money and closing its doors—a far cry from its current $1.5 billion valuation and $200 million in funding from the likes of Sequoia, Andreessen Horowitz, and Kleiner Perkins.
From the get-go, Loom faced market risk: the idea of having team members communicate asynchronously through video was a direct challenge to the status quos of text and video chatting. And the execution risks would be challenging too, as the market for communication tools has been and continues to be ripe with competition.
I recently spoke with Vinay to uncover Loom’s unlikely path to becoming a billion-dollar company serving millions of people. During our conversation, we touch on the pivot that changed the company’s fate, dive deep into Vinay’s strategies and core values as an entrepreneur, and look ahead to Loom’s future. But what made it all possible was the chemistry of the founding team.
How the Loom co-founders came together
In 2011, Vinay dropped out of the University of Illinois at Urbana-Champaign to work as a Software Engineer at Backplane, a well-funded Silicon startup that let users build online communities before shutting down in mid-2016. It was at Backplane where Vinay met one of his two co-founders, Shahed Khan, who was just 18 at the time and decided to intern at the company in lieu of attending college.
The first eight months of working on Loom and the big break that saved the company
After deciding to start a company together in late-2015, the team spent the better part of the next eight months building and iterating on what they called Opentest, a product to help teams collect video-recorded user feedback directly on their website.
Over the following months, Opentest went through various failed launches and fundraising attempts, and after a certain point, it seemed like what they were building was falling on deaf ears.
But despite the lack of early traction, what the team learned from its most passionate early customers was that the team’s initial hypothesis was right—that video was severely underutilized at work.
With maxed-out credit cards and two weeks of runway left, the team’s last hurrah was to decouple its Chrome extension as a standalone video recorder and launch on Product Hunt. Luckily, this time the public reception would be wildly different. The day of, Loom saw more signups than it ever had in the past 6 months and over the next week, the product would see thousands more signups.
“Shahed and I had been up for 36 hours straight through the launch, were running on fumes and excitement, and doing customer support when we decided to give Joe a call since he was at a wedding with his girlfriend (now wife) Maggie,” Vinay tells me.
“We knew he was feeling antsy that he couldn’t be with us, and, when we told him, he told Maggie ‘We did it Maggie. I don’t know what we did, but we did it.’”
It was a big break. That day, June 30th, 2016, allowed Loom to narrowly escape death and put the company on a different trajectory. The traction helped the company raise its first venture check from 1517 Fund and the team move to San Francisco, Vinay shares.
For the first time, Loom finally looked like it might work.
Choosing what features to build
Now having a serious volume of users to serve and momentum from a successful launch, Loom’s next challenge was to execute on building a great experience for existing users—early evangelists who would share their experience with friends if done right.
The team listened intently to its early users, who had a lot of feedback and feature requests. Over the coming months, Vinay would lead the team to ship features almost every day. And along with the velocity the team had to build, evaluating the right features to work on became crucial.
When I asked Vinay about how he thought about feature requests and how to allocate the team’s effort towards building them, he shared that the best features were those “that were in the sweet spot of being the most requested from our users, scoped to our extension and website, and would genuinely be useful to ourselves as power users.”
“We had started using our recorder internally every day, so there were a few features that not only changed the game for our users but our own usage of the product as well,” he tells me.
How Loom hired the right talent to keep up its growth
Competing against tech giants for top talent, Loom had to try everything to convince talented people to come work with the company.
It was a strenuous process. “I was probably getting about 1 intro call for every 200-300 engineers I reached out to. It was brutal, especially before we rebranded from Opentest to Loom,” Vinay tells me.
At the top of the funnel, the co-founders tried many approaches, from trying to poach their friends from other companies to reaching out in hobby Slack groups to messaging engineers on LinkedIn, Twitter, email, or whatever contact information they could find on someone they wanted to work with.
Once they got a candidate interested in Loom, the interview process for engineers would emphasize their ability to build something full-stack and quickly—and could last up to two hours.
“We would ask everything about the candidate’s time at each previous employer, including uncomfortable questions like ‘How would your boss rate your performance and why?’,” Vinay tells me.
“We’ve pared down, standardized, and improved our interviews over time, but the exhaustiveness of our early interview practices allowed us to find some seriously great talent, many times overlooked with non-traditional backgrounds. Many of these people are still at Loom today.”
Putting together the right team at Loom during the early days helped the company dramatically grow the number of users it served. But perhaps more importantly, this growth helped the team understand customers deeper and build features that would convert testers to paying users.
One of the biggest challenges for SaaS companies is building something that’s not just useful but also something that provides enough value so customers want to pay for it.
At Loom, converting a “tester”—someone who may be trying Loom out for the first time—to a long-term, paying customer, happens in two steps: the “magic moment” and the “habit moment,” as Vinay calls them.
“The first ‘aha’ moment is the magic moment. It’s when a user realizes ‘Wow this thing is fast – I’ve never been able to create a video this quickly.’ Scaling and optimizing this over time has meant making this experience possible across millions of devices, thousands of varying internet capabilities, and from every country in the world. It’s been a massive technical journey.”
With so many different communication tools out there, especially with video conferencing software seizing the day during the Covid-19 pandemic, it can be difficult for customers to understand the value of asynchronous video messaging if they don’t use the product at least once.
The “habit moment” is more complex to get right.
“The habit moment when a user starts to understand sending a Loom is something they should probably be doing every day for many different reasons. They start to realize a Loom is a format that has many use cases just as long-form writing, presentations, or spreadsheets do,” Vinay explains.
When I asked Vinay how Loom helps customers get to that habit moment, he told me: “We do a lot to ensure this habit moment is met over time. We put use cases in front of users based on personal information. We make sure we’re available on every platform [our customers] do work on (Mac, Chrome, iOS, Android, SDK). We encourage groups of users to start using the product together, firstly through the inherent viral loop built into sending a Loom and secondly through referral, invite, and workspace consolidation flows.”
While implementing strategies to help users get to these two moments, Loom has also moved upmarket, adopting a traditional bottom-up growth, top-down sale model where team members within a company adopt Loom individually and the rapid spread of the tool internally helps get buy-in from management to buy licenses.
This bottom-up growth model has helped Loom grow to over 200,000 enterprise customers and, recently, onboard a customer that purchased a 10,000+ seat deployment, Vinay tells me.
